A million-dollar question: What are the best crypto staking coins?
Before the emergence of cryptocurrency staking - and the formation of the pool of the best crypto staking coins which we will reveal in this blog post - this industry was reminiscent of the Wild West during the California Gold Rush. Blinded by greed, people from all walks of life pursued shady ICOs and spent their life savings on 'shitcoins,' hoping to become gazillionaires overnight. Predictably, only a handful of them struck it rich while the rest of the 'gold prospectors' were left high and dry, punished for their greed, gullibility, and impatience.
After witnessing how many people got burnt during two bear markets, the new generation of crypto investors has grown more prudent. They are willing to opt for a smaller but significantly more stable source of income over 'faster' things like trading with leverage or participating in 'pump-and-dump' schemes. Today, staking coins is the new sexy as Proof of Stake blockchains are enjoying an influx of new participants who are willing to contribute to the seamless work of respective networks in exchange for ample rewards in crypto.
The popularity of crypto staking is rising quickly, but what are the best coins to stake?
As of the time of writing, the global staking market capitalization stands at $126.26 billion, with net staking flow being up $185.08 million in the past week alone; the annual global rewards paid to network participants amount to $5.85 billion. These figures will inevitably rise since we are at the beginning of the staking boom that was kickstarted by the Merge, the final phase of the transition of the Ethereum blockchain to the Proof of Stake consensus mechanism.
And when the long-awaited bull market finally commences, people could be vying for the opportunity to become a validator. Even now, as bears still dominate the crypto market, the team at the Ethereum Foundation has decided to limit the number of new validators to prevent a critical drop in the circulating supply of ETH. So, if you don't want to be too little, too late with your staking, stake crypto now through a trusted non-custodial provider.
Our methodology for picking the best Proof of Stake coins
However, even if you are at the ready, it could be hard to figure out the best coins for staking since there are over 80 of them, all with distinct nuances. But worry not, we at CryptoStake have cherry-picked the top 5 staking coins that fit the following criteria:
- Top-tier cryptocurrency with significant market capitalization, making it less susceptible to price crashes amid strong selling pressure;
- Each coin of our choosing boasts solid fundamentals, meaning that it's backed by strong tech that is bound to make an impact within the industry;
- The cryptocurrency has a good pre-disposition in terms of price action before the start of a bull market;
- The coin is available for staking through the CryptoStake app or could be made available in the near future.
But before we delve into analyzing top proof of stake coins, we would like to offer a quick recap of what is staking and how proof of stake works. That way, you will have a better understanding of the actual process and the reasons why these are the best coins to stake.
Proof of Stake, the foundation for the best staking coins
Our blog already has a post where we explain in great detail what Proof of Stake is, using both technical language and interesting analogies; the other post provided a splendid insight into the history of this consensus mechanism and staking itself, from Peercoin to the Ethereum Merge. However, we'd still like to offer a quick recap and refresh your memory before biting into the meat of the story — the best staking coins.
Staking tokens on Proof of Stake blockchain explained
Proof of Stake (PoS) is a consensus mechanism that emerged in response to growing criticism of Proof of Work, a foundational method of achieving consensus in blockchain networks, introduced in the Bitcoin blockchain.The biggest pain point of PoW-based cryptocurrencies is their high energy consumption, resulting in the formation of a large carbon footprint. Other issues include:
- Concerns over mining centralization;
- Inefficient use of computational resources;
- Scalability issues;
- Relative weakness in the face of 51% attacks.
The introduction of PoS has definitely solved the energy consumption issues for blockchains like Ethereum that transitioned from PoW. For example, Ethereum's power usage decreased by a staggering 99% since the switch to Proof of Stake, taking eco-activists off its back. The full solution to the scalability problem remains in the works for Ethereum, though other blockchains that incorporate PoS might be more successful in that regard. But the main takeaway here is that Proof of Stake represents an improvement from the foundational consensus mechanism — something that will help pave the way for blockchain to genuine global adoption.
Things that happen underneath the surface or how the best cryptos for staking work
Proof of Work implies that network participants or validators (powerful computers) solve complex tasks to maintain the functionality of the underlying blockchain. They put something of value (energy and computation capacity) into the network; in PoS, the value comes in the form of a stake — a certain sum in the blockchain's native cryptocurrency that a validator locks up in a smart contract for a certain time. This sum (e.g., 32 ETH for the Ethereum network) serves as collateral that could be frozen or even destroyed in case the participant attempts something malicious.
Once the funds are locked and the software is up and running (you'd have to install three clients), the validator's duty (when chosen by the lottery method) lies in verifying the validity of new blocks and propagating new blocks from time to time. The larger the stake, the higher the chance for a validator to be appointed to perform this task and receive the reward in native tokens upon its completion.
The basic concept of PoS isn't overly complicated, though it does get techie if you start to dig deeper. But we won't be doing any more digging because the modern staking industry offers solutions like CryptoStake that lets you become a validator in one click, with a unique and verifiable ID number and full control over staked funds. No nerdy mumbo-jumbo, just straight-up best staking app that streamlines your earnings in crypto. More on that later; now, the time has come to reveal our top cryptocurrencies for staking in 2023 (what's left of it) and 2024.
Ethereum (ETH) - the best crypto for staking, period
Ethereum has always been the powerhouse of the crypto industry, but with the transition to PoS, the by far second-largest cryptocurrency got leverage over Bitcoin, significant enough to eventually throw the forefather of crypto off its throne. After the Merge, the money has been flowing into this blockchain network in a constantly growing stream. Ethereum's market capitalization increased by 158% to $53.3 billion over the past three months, while the number of validators enjoyed a 90.4% boost to 879,600 over the same period.
The blue curve on the chart above represents the amount of staked ETH since the middle of August, with the purple curve being the price. As you can see, staking has been on the rise even when the price was dangling at the bottom. Now that ETH seems to have bottomed out - at least it overcame the tremendous selling pressure - we can expect an even larger influx of those who want to put money in this blockchain network and earn rewards in crypto, like 2.94% APY offered by CryptoStake. And keep in mind the validator cap introduced by the Ethereum Foundation - it may have an effect if you plan on running solo, though you can always get access to the Ethereum validator through CryptoStake.
Price action is another factor that we must take into account to support the claim that ETH is among the most profitable staking coins. We would like to analyze it without getting too nerdy, trying to make it comprehensible even for those who don't know the first thing about technical analysis.
A quick explanation of the basics of technical analysis of the best crypto for staking
Here we have the price action of ETH on a weekly time frame - each candle represents a week of price action. The blue curve is a 200-period exponential moving average (EMA). It represents the average (mean) of the price of ETH over the past 200 days; it represents the long-term price trend that helps identify its overall direction.
The orange curve is a 50-period EMA, which puts more weight on recent price movement and represents a shorter-term trend. The combination of these two EMAs offers a more comprehensive view of price action and allows us to confirm the trend's direction and strength.
The purple line represents the next area of resistance, where the price is likely to encounter intense selling pressure. The behavior of the price near that area will give a hint about whether buyers or sellers are in control.
How ETH is faring
Now that we have figured out the basics of technical analysis for this analysis, it's time to check out the chart. Over the last four weeks, ETH has been in the phase of explosive growth, much like the rest of the cryptocurrency market. During that time, the price of the second-largest cryptocurrency has risen by 34% and tested the level at $2,100, where the price peaked last time. In doing so, Ethereum has broken out of the chart pattern called the 'bullish flag,' marked with two parallel black lines. Moreover, the price bounced off the 200 EMA or used it as support, in technical terms.
A strong move like that after support confirmation might be a sign that the buyers are finally getting back in the saddle, which is good news for stakers too, because it translates to an increase in the value of funds locked in the smart contract. However, don't get excited too soon, because it's still not a full-fledged uptrend but rather a partial recovery after a cascading 75% drop from $3,600. Moreover, the price is yet to make a higher high, in other words, to close above the previous peak (high). Should ETH reach $2,400 (purple line), followed by a mild retracement to $2,100, only then we could get more optimistic about the overall bullishness of the market.
Polkadot (DOT) still among the best Proof of Stake coins despite the market's collapse
Even though Polkadot (DOT) is widely regarded as one of the most profitable staking coins - CryptoStake offers APY as high as 15.5% - it has had a pretty rough year in terms of price action. This top Proof of Stake coin has been in a state of perpetual downtrend since the commencement of the bear market in November 2021. During those long, grueling months, the 14th-ranked cryptocurrency lost a staggering 90% of its value as it went down from an all-time high at $55.2 to the current $5.4.
Needless to say, such a turn of the market tide was disastrous for holders who acquired DOT above $10, the level above which the price had held for two years before taking a nosedive. But given the strong selling pressure that this market experienced for many, many months, a lot of people opted to unstake DOT in the required 30 days and wait for an opportune moment to stock up on this fundamentally sound coin and stake, especially given how lucrative the APY offered by providers like CryptoStake is.
On the fundamental level, the ongoing progress in Polkadot's developments, including the implementation of the XCM communication standard, upgrades to the XCMP protocol, improvements in governance, and the introduction of parathreads, sets the stage for a more robust and resilient ecosystem. Despite the challenging price trends experienced by Polkadot in recent times, these fundamental enhancements may pave the way for a positive impact on DOT price action in 2024.
The weekly chart shows very positive dynamics for DOT over the past month, as it experienced a solid 59% increase in trading volume—a clear sign of rising demand from buyers who want to stake coins. Despite displaying clear bullish intentions, DOT remains well below the 200 EMA, placing it in bearish territory. This suggests that a rejection and subsequent price depreciation from $6 to $4.9 may be on the cards.
Nevertheless, the bearish period for this top staking coin is coming to an end, and we may witness a parabolic rally in early 2024, given that DOT holds a ton of upside potential. In conclusion, if you aren't holding DOT bags and have stablecoins or fiat to invest in the best coins for staking, Polkadot must be on your shortlist. Fundamentally perfect with a lot of room for price growth and great APY—what more can you ask for?
Cosmos (ATOM) - bottoming out, new price highs ahead
Even though Cosmos (ATOM) is currently ranked below the top 20 (24th to be exact), it has a rightful place among top staking coins, thanks to its distinctive Proof-of-Stake consensus algorithm ensuring network security and rewarding active contributors. Developers praise this blockchain for interoperability and scalability, whereas ATOM offers crypto stakers the prospect of the juiciest rewards in the industry - the CryptoStake app features Cosmos with an APY of over 21%, something that hardly any other provider can match.
When it comes to fundamentals, 2023 marked a significant year for this cryptocurrency, witnessing the launch of Interchain Security, including two top-tier consumer chain projects (Neutron and Stride), and the introduction of the Liquid Staking Module, empowering ATOM stakers to use their assets for collateral and liquidity in Cosmos DeFi.
However, things haven't been too good for ATOM on the price action spectrum. The top staking coin began the year with a nice rally that took the price close to $16. However, it failed to make a new high, thus failing to induce an uptrend. Instead, Cosmos began sliding downhill without any signs of reversal up until last month.
In mid-October, the price bottomed out and began rallying for three straight weeks. So far, it's far from a full reversal, as there are at least two areas of resistance in the face of the 50- and 200-EMAs, but it also gives ATOM more space to grow—more than 80% to last year's high. For crypto stakers, it means there's still time to load up on Cosmos before it explodes to the upside. You still have several months to do so and enjoy the highest APY in the crypto space if you go with CryptoStake.
Solana (SOL), a monstrous gainer with great prospects for 2024
When it comes to bullish price action, Solana (SOL) has been the most lit PoS cryptocurrency, displaying gains that could make meme coins envy. In a span of four weeks, SOL gained a stunning 165% to the joy of its holders who bought this staking token when it was priced around $30. As of the time of writing, Solana's value stands at $58 on the backdrop of a massive rally that took it way above the 200 EMA and confirmed a full market reversal.
As for the fundamentals, next year holds significant developments for Solana. In 2024, Solana 2.0 will introduce custom sidechains, enabling developers to enhance their projects, Solana identity for streamlined user management, and substantial improvements in scalability and performance, making transactions smoother and the platform more appealing for cryptocurrency staking. All in all, SOL is the PoS coin to keep on a shortlist in 2024.
Cardano (ADA), a big year ahead
Like all top coins for staking on our list, Cardano (ADA) also enjoyed a bullish month, adding 60% to its value since mid-October. The weekly chart indicates that the price has breached the 200 EMA, although it's yet to confirm it as support and establish a higher high above the previous peak at $0.45. Additionally, it faces the 50 EMA and an upcoming resistance zone, requiring buyers to exert effort to transform this rally into a fledgling uptrend. If the bullish momentum persists, we anticipate ADA gaining another 60% in the next 3-4 months, potentially reaching around $0.6 by the end of the first quarter of 2024.
The next year will be 'constitutional' for Cardano's ecosystem with the crucial ratification of CIP 1694 in December 2023, paving the way for liquid democracy. Cardano enthusiasts globally can actively contribute to the development of the first Cardano Constitution through Constitutional Workshops, leading to a historic vote in 2024, marking the culmination of decentralized governance and shaping Cardano's promising future that will translate to more gains and more people wanting to stake this top PoS coin.